Obama’s Foolish Obamacare Compromise

Nov. 14 (Bloomberg) -- President Barack Obama is trying to
make up for an exceedingly dumb promise with a moderately dumb
compromise. For many people who have lost their old insurance
policies, his offer may be no help at all.

When Americans first began complaining last month that the
Affordable Care Act meant the cancellation of insurance plans
that didn’t meet the law’s coverage requirements, Obama
responded that the new plans available under the law were better
than what they lost. He argued that tough regulations in the
individual insurance market were in everybody’s interest.

That response proved to be politically costly, and Obama
today reversed himself, saying that insurers will now be able to
offer subpar plans until the end of 2014, if state insurance
regulators agree. The extension will apply only to those who
already have those plans.

The trouble with that compromise is that while Obama’s
earlier argument may have been tone-deaf, it was also accurate.
If it was bad policy a month ago to let insurers skimp on some
essential benefits, such as maternity care or mental health
care, it’s still bad policy today. If it was bad policy then to
let insurers keep healthy young people away from exchange-based
risk pools by selling them low-cost, low-coverage plans, it’s
still true now.

So today’s announcement is defensible only on one of two
arguments. The first is that it’s better than the alternatives
before Congress, which range from letting anyone who wants to
buy an unregulated plan do so, exacerbating the problem of
participation on the exchanges, to somehow forcing insurers to
maintain their current plans.

Of course, if the White House’s goal was only to head off
ill-considered congressional action, the president could simply
have said he would veto any such bill.

A slightly better defense of today’s announcement would be
that it honors the promise Obama made when the law was being
debated -- the pledge that anybody who likes their current plan
can keep it.

Except that’s not true. Insurers have said they won’t
revive many of the plans they have already canceled, especially
given the logistical challenges involved so close to the start
of the new policy year. Even if they do, state regulators may
decide not to let them. So for an undetermined number of people,
the president’s promise will remain broken.

That means today’s announcement is marginally harmful for
the law’s future and for the public, and does little to make
good on the president’s pledge.